Trading Commodity Options with Creativity tackles complex topics with a flair of simplicity. Enjoy a sneak peek into the insights offered by this book.
Commodity options are valued based on supply and demand in the market place; that value can be categorized as intrinsic or extrinsic value.
Implied volatility is the premium assigned to option value that accounts for market participants' expectations of future volatility. It should not be ignored.
Option buyers tend to face a low probability of success in exchange for unlimited profit potential, but perhaps option spreads offer a lower cost and smarter way to play the commodity markets.
Green traders assume the purchase of a call option and a put option nearly guarantees a profit, but in reality it almost guarantees a loss.